Best Practices: To Use or Not to Use- That is the Ten Million Dollar Question
It turns out that your English teacher may have been right, after all: a misplaced comma can be a big deal. A Maine dairy company was reminded of the importance of grammar in a recent court decision, that could cost the dairy company an estimated $10 million. In 2014, three truck drivers sued Oakhurst Dairy ... Read More
Best Practices: Documenting Small Construction Projects Under $350,000
SBA guaranteed loan proceeds may be used to construct or renovate buildings. The SBA provides specific requirements for SBA guaranteed loans where the construction component of the loan is more than $350,000. For small construction projects where the construction component of the loan is less than $350,000, the SBA has more relaxed requirements. However, even ... Read More
Best Practices: Franchise Agreements and Consistencies with the SOPs
Lenders extending financing to franchisees – either to re-finance existing debt or open new facilities – have historically been concerned with determining whether affiliation exists between the franchisor and franchisee. The Small Business Administration (“SBA”) streamlined this determination in Standard Operating Procedure 50 10 5(I) (“SOP”) by requiring lenders to obtain the SBA Addendum to ... Read More
Best Practices: All Available Collateral
Everything AND the kitchen sink? This question faces all SBA lenders who are attempting to comply with SBA’s policy concerning available collateral. Under SOP 50 10 5(I), Chapter 4, Paragraph II.A. SBA acknowledges that “one of the primary reasons lenders use the SBA program is for those Small Business Applicants that demonstrate repayment ability but ... Read More
Best Practices: Change of Ownership via Stock Purchase – A Primer
Changes of ownership financed with SBA guaranteed loans are often structured as stock purchase transactions. Beyond the rigorous requirements imposed by the SBA, the transfer of fractional ownership interests from one individual or entity to another must adhere to strict, corporate formalities required by law. While these can vary significantly from jurisdiction to jurisdiction, some ... Read More
Best Practices: Prudent Liquidation Deadline is Quickly Approaching
When SBA issued Standard Operating Procedure 50 57 (2), which became effective on December 1, 2015, the Agency included a new guideline designed to encourage SBA lenders to complete liquidation of their 7(a) loans in a “prompt, cost-effective and commercially reasonable manner.” This concept, defined by the SBA as “Prudent Liquidation,” is intended to incentivize ... Read More